US$6.7M fiscal reform programme ends

– govt notes significant benefits to GRA, private sector

The two-year US$6.7 million Guyana Threshold Country/ Implementation Plan (GTCP/IP) aimed at reducing Guyana’s fiscal deficit by boosting its ability to collect revenue has been completed.

According to the Government Information Agency (GINA), the GTCP/IP has been an enabling factor in the advancement of Guyana’s reform process. It came from government’s commitment “to achieve and maintain fiscal sustainability through an efficient and effective tax regime, efficient public expenditure management and improved fiduciary oversight” the release said. The plan focused on reducing the deficit by improving Guyana’s ability to collect revenue and better manage its budget, improve parliamentary oversight, and reduce the number of days and cost to start a business by streamlining business registrations.

Through the work of NATHAN and Associates consultancy, the partnership of the Guyana Government Millennium Challenge Corporation (MCC) the United States Agency for International Development (USAID) and the Inter-American Development Bank, the programme was described as a great accomplishment during an official close-out reception.

President Bharrat Jagdeo and other government officials lauded MCC Director of the Department of Policy and International Relations Malik Chaka, US Embassy Charge d’ Affaires Karen Williams and representatives of USAID and NATHAN and Associates. In his address Jagdeo thanked the US government and the MCC for allowing Guyana to continue the country’s “very aggressive reform process.”

MCC, a US Government Corporation designed to work with developing and poor countries, is based on the principle that aid is most effective when it reinforces good governance, economic freedom and investments in people that promote economic growth and elimination of extreme poverty. “The MCC Threshold Programme assists countries that are on the threshold of eligibility for Millennium Challenge Account Compacts and is used to assist countries to address specific policy weaknesses indicated by the country’s scores on 16 policy indicators in three categories: ruling justly, investing in people and encouraging economic freedoms.

Jagdeo said the programme came at an opportune time as Guyana was in the process of establishing, consolidating and rebuilding democratic institutions, putting the private sector in the forefront of development and promoting transparency in government’s financial and policy-making operations. “Private sector development is critical to the future good fortunes of this country and we have to continue working to create that environment to grow local capital because we need to develop a local entrepreneurial class but also to be open to foreign investments,” he said. Jagdeo said government will continue working and building on these reforms to ensure that environment is created because it’s an important part of the development strategy.

Jagdeo also spoke about the challenges to encouraging transparency in government operations. He said he was pleased with the changes made so far in the development of democratic institutions “…constitutional changes, framework for greater inclusively, particularly in a country like ours which is multi-ethnic and has had a history of political problems. We need to continue on these reforms and I wish that the quality of the debate (Budget) would mirror what is going on the parliament now,” he said.

The president said the most gratifying of reforms was the introduction of the Value Added Tax (VAT), which is today responsible for significantly enhancing the tools available to the Guyana Revenue Authority (GRA). Country ownership is a key objective of the MCC programmes, and according to Chaka, the Guyana programme a good example of this objective. “This was a programme that from day one was owned by the Government and people of Guyana. They provided the focus, participation of people in Government and they also provided a lot of the human resources that make this programme a success,” he said.

Chaka said reform is not a smooth sailing process but commended Guyana, particularly the president’s leadership, for its involvement in the process. He also said the completion of the GTCP/IP only marks the beginning of the reform process in Guyana. “At the end of the day these reforms will bring foreign investment, they will create the macro economic environment to help this economy grow,” he said. Chaka was hopeful that the programme would allow the government to leverage additional donor support in helping to move the reform effort forward and to continue making substantial investment in finance and human resources.

In August 2007, Guyana signed the US$6.7 million MCC Threshold Programme and implementation of the two-year project started in January 2008. MCC Deputy Chief Executive Officer Rodney Bent and Jagdeo officiated at the signing of the programme. According to GINA, James Waller of NATHAN and Associates commended the government for demonstrating its ability to undertake meaningful reforms in a very short period of time. “This project is a demonstration of what good partnership is all about,” he said. The partnership was with the government, the GRA, the Ministry of Finance, the National Procurement and Tendering Administration, the Guyana Office for Investment (GO-Invest), the Deeds Registry and the Parliament.

Additionally, a press release from the US Embassy said USAID Mission Director Carol Horning said upgrading the Deeds Registry operations dramatically reduced the time it takes to register businesses, from 45 days down to 30 days so far. She said similar milestones have been recorded and continue to be noted in the private sector environment and investment opportunities in Guyana.

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